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What changed in MYR GROUP INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MYR GROUP INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+246 added−234 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-22)

Top changes in MYR GROUP INC.'s 2023 10-K

246 paragraphs added · 234 removed · 212 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCooper has held a number of additional positions since joining us in 1989, including business development manager, regional manager, district manager, and estimator. William F. Fry joined us as vice president, chief legal officer and secretary in January 2019. Prior to joining us, Mr.
Biggest changeCooper served as group vice president, east of MYR Group from 2009 to 2013 and vice president T&D, east of MYR Group from 2006 to 2009. Mr. Cooper has held a number of additional positions since joining us in 1989, including business development manager, regional manager, district manager, and estimator. Don A.
Our T&D segment provides a broad range of services on electric transmission and distribution networks, substation facilities which include design, engineering, procurement, construction, upgrade and maintenance and repair services, with a particular focus on construction, maintenance and repair, to customers in the electric utility industry throughout the United States and Ontario, Canada.
Our T&D segment provides a broad range of services on electric transmission and distribution networks and substation facilities which include design, engineering, procurement, construction, upgrade and maintenance and repair services, with a particular focus on construction, maintenance and repair, to customers in the electric utility industry throughout the United States and Ontario, Canada.
These strategies, objectives and measures are advanced through a number of programs, policies and initiatives, including those related to: health and safety; inclusion, diversity, and equality; employee recruitment, training and development; and compensation and benefits programs. 9 TABLE OF CONTENTS We seek to attract and retain highly qualified craft employees by providing a superior work environment through our emphasis on safety, competitive compensation, and high-quality fleet of equipment.
These strategies, objectives and measures are advanced through a number of programs, policies and initiatives, including those related to: health and safety; inclusion, diversity, and equality; employee recruitment, training and development; and compensation and benefits programs. 9 TABLE OF CONTENTS We seek to attract and retain highly qualified craft employees by providing a superior work environment through our emphasis on safety, competitive compensation, and a high-quality fleet of equipment.
There are a number of barriers to entry into the transmission markets, including the cost of equipment and tooling necessary to perform transmission work, availability of qualified labor, scope of typical transmission projects and technical, managerial and supervisory skills necessary to complete the job.
There are a number of barriers to entry into the transmission and distribution markets, including the cost of equipment and tooling necessary to perform transmission work, availability of qualified labor, scope of typical transmission projects and technical, managerial and supervisory skills necessary to complete the job.
We believe that we have a favorable competitive position in the markets that we serve, due in part to our strong operating history, strong local market share, our reputation and our relationships with our customers.
We believe that we have a favorable competitive position in the markets that we serve, due in part to our operating history, local market share, our reputation and our relationships with our customers.
Risk Factors — Backlog may not be realized or may not result in profits and may not accurately represent future revenue.” Certain projects that we undertake are not completed in one accounting period. Revenue on construction contracts is recognized over the contract term based on costs incurred under the cost-to-cost method.
Risk Factors — Backlog may not be realized or may not result in profits and may not accurately represent future revenue.” Many projects that we undertake are not completed in one accounting period. Revenue on construction contracts is recognized over the contract term based on costs incurred under the cost-to-cost method.
We believe that the principal competitive factors that customers consider in our industry are: • price and flexible contract terms; • safety programs and safety performance; • reputation and relationships with the customer; • technical expertise and experience; • management team experience; • geographic presence and breadth of service offerings; • willingness to accept risk; • quality of service execution; • specialized equipment, tooling and centralized fleet structure; • the availability of qualified and licensed personnel; • adequate financial resources and bonding capacity; • technological capabilities; and • weather-damage restoration abilities and reputation.
We believe that the principal competitive factors that customers consider in our industry are: • price and flexible contract terms; • safety programs and safety performance; • reputation and relationships with the customer; • technical expertise and experience; • management team experience; • geographic presence and breadth of service offerings; • willingness to accept risk; • quality of service execution; • specialized equipment, tooling and centralized fleet structure; • the availability of qualified and licensed personnel; • adequate financial resources and bonding capacity; • technological capabilities; and • emergency restoration abilities and reputation.
Approximately 86% of our craft employees are members of unions, with the majority being members of the International Brotherhood of Electrical Workers (“IBEW”), who are represented by many local unions under agreements with generally uniform terms and varying expiration dates.
Approximately 84% of our craft employees are members of unions, with the majority being members of the International Brotherhood of Electrical Workers (“IBEW”), who are represented by many local unions under agreements with generally uniform terms and varying expiration dates.
Our C&I segment provides services such as the design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting and signalization in the United States and western Canada. We concentrate our efforts on projects where our technical and project management expertise are critical to successful and timely execution.
Our C&I segment provides services such as the design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure in the United States and western Canada. We concentrate our efforts on projects where our technical and project management expertise are critical to successful and timely execution.
We are a final-stage manufacturer for several configurations of our specialty vehicles, and, in the event that a particular piece of equipment is not available to us, we can often build the component on-site, which reduces our reliance on our equipment suppliers. Our United States based fleet of equipment is managed by our centralized fleet management group.
We are a final-stage manufacturer for several configurations of our specialty vehicles, and, in the event that a particular piece of equipment is not available to us, we can often build the component on-site, which reduces our reliance on our equipment suppliers. Our fleet of equipment is generally managed by our centralized fleet management group.
Our backlog as of December 31, 2022 and 2021 included our proportionate share of unconsolidated joint venture backlog totaling $30.8 million and $5.4 million, respectively. 7 TABLE OF CONTENTS Trade Names and Intellectual Property We operate in the United States under a number of trade names, including: The L. E.
Our backlog as of December 31, 2023 and 2022 included our proportionate share of unconsolidated joint venture backlog totaling $18.9 million and $30.8 million, respectively. 7 TABLE OF CONTENTS Trade Names and Intellectual Property We operate in the United States under a number of trade names, including: The L. E.
We operate a centralized fleet facility, as well as numerous regional maintenance shops throughout the United States, that are staffed with mechanics and equipment managers who service our fleet.
We operate a centralized fleet facility, as well as numerous regional maintenance shops, that are staffed with mechanics and equipment managers who service our fleet.
For the years ended December 31, 2022, 2021 and 2020, our top 10 customers accounted for 35.4%, 34.9%, and 32.7%, of our revenues, respectively. For the years ended December 31, 2022, 2021 and 2020, no single customer accounted for more than 10.0% of annual revenues.
For the years ended December 31, 2023, 2022 and 2021, our top 10 customers accounted for 37.9%, 35.4%, and 34.9%, of our revenues, respectively. For the years ended December 31, 2023, 2022 and 2021, no single customer accounted for more than 10.0% of annual revenues.
These variation can be influenced by a number of factors such as weather, daylight hours, availability of workforce, asset readiness and holidays.
These variation can be influenced by a number of factors such as weather, daylight hours, availability of workforce, asset readiness and holidays. See also “Item 1A.
For the years ended December 31, 2022, 2021 and 2020, revenues derived from T&D customers accounted for 58.0%, 52.1% and 51.4% of our total revenues, respectively, and revenues derived from C&I customers accounted for 42.0%, 47.9% and 48.6% of our total revenues, respectively. Types of Service Arrangements and Bidding Process We enter into contracts principally through a competitive bid process.
For the years ended December 31, 2023, 2022 and 2021, revenues derived from T&D customers accounted for 57.3%, 58.0% and 52.1% of our total revenues, respectively, and revenues derived from C&I customers accounted for 42.7%, 42.0% and 47.9% of our total revenues, respectively. Types of Service Arrangements and Bidding Process We enter into contracts principally through a competitive bid process.
As of December 31, 2021, we had approximately $406.0 million in original face amount of bonds outstanding for projects in our T&D segment and approximately $983.3 million for projects in our C&I segment. The ability to post bonds provides us with a competitive advantage over smaller or less financially secure competitors.
As of December 31, 2022, we had approximately $541.5 million in original face amount of bonds outstanding for projects in our T&D segment and approximately $1.43 billion for projects in our C&I segment. The ability to post bonds provides us with a competitive advantage over smaller or less financially secure competitors.
Human Capital Resources We believe that our people are our greatest assets and the success and growth of our business depend in large part on our ability to attract, develop and retain a diverse population of talented, qualified and highly skilled employees at all levels of our organization, including the individuals who comprise our workforce as well as our executive officers and other key personnel.
Risk Factors — Our business may be affected by seasonal and other variations, including severe weather conditions and the nature of our work environment.” Human Capital Resources We believe that our people are our greatest assets and the success and growth of our business depend in large part on our ability to attract, develop and retain a diverse population of talented, qualified and highly skilled employees at all levels of our organization, including the individuals who comprise our workforce as well as our executive officers and other key personnel.
As of December 31, 2022, we had approximately $541.5 million in original face amount of bonds outstanding for projects in our T&D segment and approximately $1.43 billion for projects in our C&I segment. Our estimated remaining cost to complete these bonded projects for both segments was approximately $880.2 million as of December 31, 2022.
As of December 31, 2023, we had approximately $683.4 million in original face amount of bonds outstanding for projects in our T&D segment and approximately $1.76 billion for projects in our C&I segment. Our estimated remaining cost to complete these bonded projects for both segments was approximately $726.1 million as of December 31, 2023.
Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities and transportation control and management systems.
Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure.
Fixed-price contracts accounted for 62.7% of total revenue for the year ended December 31, 2022, including 47.8% of our total revenue for our T&D segment and 83.3% of our total revenue for our C&I segment. Our EPC contracts are typically fixed-price and may be entered into through joint ventures.
Fixed-price contracts accounted for 65.2% of total revenue for the year ended December 31, 2023, including 52.7% of our total revenue for our T&D segment and 82.0% of our total revenue for our C&I segment. Our EPC contracts are typically fixed-price and may be entered into through joint ventures.
Waneka 61 Senior Vice President, Chief Operating Officer C&I Richard S. Swartz was appointed president and chief executive officer in January 2017 and has served as a member of our Board of Directors since April 2019.
Fry 49 Vice President, Chief Legal Officer and Secretary Richard S. Swartz was appointed president and chief executive officer in January 2017 and has served as a member of our Board of Directors since April 2019.
Fry served as vice president — legal for Team Inc., a specialty industrial service, engineering and manufacturing company, from 2016 to 2018. Mr. Fry was general counsel, secretary, vice president & chief compliance officer of Furmanite Corporation, a provider of specialized technical services and product solutions, from 2012 to 2016, prior to its merger with Team Inc.
Fry was general counsel, secretary, vice president & chief compliance officer of Furmanite Corporation, a provider of specialized technical services and product solutions, from 2012 to 2016, before its merger with Team Inc. Prior to joining Furmanite Corporation, Mr.
Our T&D services include the construction and maintenance of high voltage transmission lines, substations, lower voltage underground and overhead distribution systems, clean energy projects and limited gas construction services. The T&D segment also provides emergency restoration services in response to, wildfire, ice or other damage.
Our T&D services include the construction and maintenance of high voltage transmission lines, substations and lower voltage underground and overhead distribution systems, clean energy projects and electric vehicle charging infrastructure. The T&D segment also provides emergency restoration services.
Subject to the foregoing discussions, the following table summarizes our estimate of backlog that we believe to be firm as of the dates shown and the backlog that we reasonably estimate will not be recognized within the next twelve months: Backlog at December 31, 2022 (in thousands) Total Amount estimated to not be recognized within 12 months Total backlog at December 31, 2021 T&D $ 1,065,476 $ 115,881 $ 676,130 C&I 1,436,351 335,935 1,113,014 Total $ 2,501,827 $ 451,816 $ 1,789,144 Changes in backlog from period to period are primarily the result of fluctuations in the timing of awards and revenue recognition of contracts.
Subject to the foregoing discussions, the following table summarizes our estimate of backlog that we believe to be firm as of the dates shown and the backlog that we reasonably estimate will be recognized within the next twelve months, and the amount estimated to be recognized after the next twelve months: Backlog at December 31, 2023 (in thousands) Total Amount estimated to be recognized within 12 months Amount estimated to be recognized after 12 months Total backlog at December 31, 2022 T&D $ 959,553 $ 913,190 $ 46,363 $ 1,065,476 C&I 1,552,846 1,165,070 387,776 1,436,351 Total $ 2,512,399 $ 2,078,260 $ 434,139 $ 2,501,827 Changes in backlog from period to period are primarily the result of fluctuations in the timing of awards and revenue recognition of contracts.
We believe that we are in compliance with applicable regulatory requirements and we believe that we have all material licenses required to conduct our operations. Our failure to comply with applicable regulations could result in project delays, cost overruns, remediation costs, substantial fines and revocation of our operating licenses.
Our failure to comply with applicable regulations could result in project delays, cost overruns, remediation costs, substantial fines and revocation of our operating licenses.
We do not expect that continued compliance with such regulations will have a material effect upon capital expenditures, earnings, or our competitive position. 8 TABLE OF CONTENTS We are also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data regarding privacy, data protection and data security, including those related to the collection, storage, use, transmission and protection of personal information and other customer, vendor or employee data.
We are also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data regarding privacy, data protection and data security, including those related to the collection, storage, use, transmission and protection of personal information and other customer, vendor or employee data.
Swartz has held a number of additional positions since he joined us in 1982, including project foreman, superintendent, project manager and district manager. Betty R. Johnson has served as senior vice president, chief financial officer since October 2015. From October 2015 to November 2020, she also served as our treasurer. Prior to joining us, Ms.
Swartz has held a number of additional positions since he joined us in 1982, including project foreman, superintendent, project manager and district manager. Kelly M. Huntington joined us as senior vice president in January 2023 and became chief financial officer in February 2023. Prior to joining us, Ms.
Prior to his current role, he served as senior vice president of MYR Group from August 2013 to December 2016. Mr. Cooper served as group vice president, east of MYR Group from 2009 to 2013 and vice president T&D, east of MYR Group from 2006 to 2009. Mr.
Tod M. Cooper was appointed senior vice president and chief operating officer of our T&D segment in January 2017. Prior to his current role, he served as senior vice president of MYR Group from August 2013 to December 2016. Mr.
Risk Factors." Environmental Matters As a result of our current and past operations, we are subject to numerous environmental laws and regulations governing our operations, including the use, transport and disposal of non-hazardous and hazardous substances and wastes, as well as emissions and discharges into the environment, including discharges into air, surface water, groundwater and soil.
We do not expect that continued compliance with such regulations will have a material effect upon capital expenditures, earnings, or our competitive position. 8 TABLE OF CONTENTS Environmental Matters As a result of our current and past operations, we are subject to numerous environmental laws and regulations governing our operations, including the use, transport and disposal of non-hazardous and hazardous substances and wastes, as well as emissions and discharges into the environment, including discharges into air, surface water, groundwater and soil.
As of December 31, 2022, we had approximately 8,500 employees, consisting of approximately 1,600 salaried employees, including executive officers, district managers, project managers, superintendents, estimators, office managers, administrative staff, clerical personnel and approximately 6,900 craft employees.
As of December 31, 2023, we had approximately 9,000 employees, consisting of approximately 7,300 craft employees, with the remaining 1,700 employees mainly consisting of district managers, project managers, superintendents, estimators, office managers, administrative staff, clerical personnel and executive officers.
Information about our Executive Officers Name Age on February 22, 2023 Position Richard S. Swartz 59 President and Chief Executive Officer Betty R. Johnson 64 Senior Vice President and Chief Financial Officer Tod M. Cooper 58 Senior Vice President, Chief Operating Officer T&D William F. Fry 48 Vice President, Chief Legal Officer and Secretary Jeffrey J.
Information about our Executive Officers Name Age on February 28, 2024 Position Richard S. Swartz 60 President and Chief Executive Officer Kelly M. Huntington 48 Senior Vice President and Chief Financial Officer Tod M. Cooper 59 Senior Vice President, Chief Operating Officer T&D Don A. Egan 53 Senior Vice President, Chief Operating Officer C&I William F.
Prior to joining Furmanite Corporation, Mr. Fry worked for American Tank & Vessel, Inc., a specialty engineering and construction company, in various roles from 2006 to 2012, ultimately serving as their general counsel. Jeffrey J. Waneka was appointed senior vice president and chief operating officer of our C&I segment in January 2017.
Fry worked for American Tank & Vessel, Inc., a specialty engineering and construction company, in various roles from 2006 to 2012, ultimately serving as their general counsel. 10 TABLE OF CONTENTS Website Access to Company Reports Our website address is www.myrgroup.com .
For a discussion of the risks associated with certain applicable laws and regulations, see “Item 1A.
For a discussion of the risks associated with certain applicable laws and regulations, see “Item 1A. Risk Factors." We believe that we are in compliance with applicable regulatory requirements and we believe that we have all material licenses required to conduct our operations.
Instead of outsourcing, some of our T&D customers also employ personnel internally to perform similar types of distribution services that we provide. C&I Competition Our C&I segment predominately competes with a number of regional or local firms and with subsidiaries of national firms.
We believe that we have a favorable competitive position in the T&D markets that we serve, due in part to our operating history, our financial strength, our reputation and our relationships with our customers. C&I Competition Our C&I segment predominately competes with a number of regional or local firms and with subsidiaries of national firms.
Waneka has held a number of additional positions since joining the Company in 1991, including regional manager, director business development and district manager. 10 TABLE OF CONTENTS Website Access to Company Reports Our website address is www.myrgroup.com .
Egan also served as president of several of our subsidiary companies including, Sturgeon Electric Company, Inc., from May 2020 to May 2023. Mr. Egan has held a number of additional positions since joining the Company in 1991, including regional vice president, vice president, district manager, operations manager, and project manager. William F.
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Compared to the transmission markets, there are fewer significant barriers to entry into the distribution markets in which we operate. As a result, any organization that has adequate financial resources and access to technical expertise can compete for distribution projects.
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Huntington served as senior vice president & chief financial officer of USIC, LLC; an underground utility location and damage prevention company from 2019 to 2022. Ms. Huntington served as senior vice president, Enterprise Strategy for OneAmerica Financial Partners, Inc. a financial services company from 2015 to 2019. Prior to OneAmerica Financial Partners, Ms.
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Certain equipment needs in Canada are managed by our Canadian operating subsidiaries.
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Huntington worked for Indianapolis Power & Light Company, an electrical utility and subsidiary of The AES Corporation, serving as president and chief executive officers from 2013 to 2015, as senior vice president and chief financial officer from 2011 to 2013 and various other from since 2003. Ms. Huntington also currently serves on the Board of Directors of Capital Power.
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Johnson served as the chief financial officer of Faith Technologies, Inc., a privately held electrical, engineering and technology systems contractor, in 2015. From 2009 to 2014, Ms. Johnson served as the vice president of global finance and chief financial officer of Sloan Valve Company. Prior to this, Ms.
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Egan was appointed to serve as senior vice president and chief operating officer of our C&I segment in May 2023. Prior to his current role, he served as group vice president and a member of the company’s executive leadership team since 2017, Mr.
Removed
Johnson was executive vice president and chief financial officer with Block and Company, Inc. from 2003 to 2009. From 1999 to 2003 she served as the vice president-operations/finance with Encompass Services Corporation. Ms. Johnson served as our controller from 1992 to 1998 and vice president and controller from 1998 to 1999. Ms.
Added
Fry joined us as vice president, chief legal officer and secretary in January 2019. Prior to joining us, Mr. Fry served as vice president - legal for Team Inc., a specialty industrial service, engineering and manufacturing company, from 2016 to 2018. Mr.
Removed
Johnson served as a member of our Board of Directors from 2007 until accepting her current position with us in 2015. Ms. Johnson also currently serves on the board of directors of Atkore Inc., a publicly-traded manufacturer of electrical products company. Tod M. Cooper was appointed senior vice president and chief operating officer of our T&D segment in January 2017.
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Prior to his current role, he served as president of our subsidiary company, Sturgeon Electric Company, Inc., from February 2015 to December 2016. Mr. Waneka served as group vice president, C&I of MYR Group from 2014 to 2015 and vice president, C&I of MYR Group from 2009 to 2014. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIncreased IT security threats and more sophisticated computer crimes, including advanced persistent threats, computer viruses, ransomware, other types of malicious code, hacking, phishing and social engineering schemes designed to provide access to our networks or data, pose a potential risk to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data.
Biggest changeThe failure of these systems to operate effectively or problems with transitioning to upgraded or replacement systems could cause delays and reduce the efficiency of our operations, which could have a material adverse effect on our business, financial position, results of operations and cash flows, and significant costs could be incurred to remediate any problem. 23 TABLE OF CONTENTS Increased IT security threats and more sophisticated computer crimes, including advanced persistent threats, computer viruses, ransomware, other types of malicious code, hacking, phishing and social engineering schemes designed to provide access to our networks or data, pose a potential risk to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data.
For example, due to the recent increase in wildfire losses and related insurance claims, insurers have reduced coverage availability and increased the cost of insurance coverage for such events in recent years, and our current levels of coverage may not be sufficient to cover potential losses.
For example, due to the increase in wildfire losses and related insurance claims, insurers have reduced coverage availability and increased the cost of insurance coverage for such events in recent years, and our current levels of coverage may not be sufficient to cover potential losses.
Furthermore, our work is performed under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and large urban centers where delivery of materials and availability of labor may be impacted and sites which may have been exposed to harsh and hazardous conditions. Working capital needs are also influenced by the seasonality of our business.
Furthermore, our work is performed under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and large urban centers where delivery of materials and availability of labor may be impacted and sites which may have been exposed to harsh and hazardous conditions. Our working capital needs are also influenced by the seasonality of our business.
Additionally, our results may be materially and adversely affected by: • the timing and volume of work under contract; • increased competition and changes in the competitive marketplace for our services; • the spending patterns of customers and governments; • safety performance and reputation; • increased costs of performance of our services caused by adverse weather conditions; • cost overruns on fixed-price and unit-price contracts; • decreased equipment utilization; • delays on projects due to permitting, regulatory issues or customer-caused delays; • disputes with customers relating to payment terms under our contracts and change orders, and our ability to successfully negotiate and obtain payment or reimbursement under our contracts and change orders; • variations in the margins of projects performed during any particular reporting period; • changes in the demand for our services; • schedule delays, equipment and materials availability and increasing insurance, equipment, labor and material costs related to supply chain disruptions, inflationary pressures, recessionary conditions, tariffs, regulatory slowdowns and market disruptions; • the timing and integration of acquisitions and the magnitude of the related acquisition and integration costs; • the loss of a major customer; • changes in the mix of our customers, contracts and business; • the amount of subcontractor and material costs in our projects; • payment risk associated with the financial condition of our customers; • increases in design, construction and operating costs, due to inflation or other unforeseen causes, that we are unable to pass through to our customers; • the termination or expiration of existing agreements; • regional and general economic conditions and the condition of the financial markets; • losses experienced in our operations not otherwise covered by insurance; • costs we incur to support growth internally or otherwise; • availability of qualified labor for specific projects; 11 TABLE OF CONTENTS • supply chain interruptions, including as a result of natural disasters, wildfires, weather, labor disputes, pandemic outbreak of disease, fire or explosions and power outages; • liabilities associated with participation in joint ventures related to third party failures; • the inability to secure sufficient funding to finance continuing operations, fund growth or to provide the required financial resources certain large projects may require; • significant fluctuations in foreign currency exchange rates; • significant fluctuations in interest rates; • changes in bonding requirements applicable to existing and new agreements; • costs associated with our multi-employer pension plan obligations; • the availability or increased cost of equipment; • impairment of goodwill or intangible assets; and • warranty claims.
Additionally, our results may be materially and adversely affected by: • the timing and volume of work under contract; • increased competition and changes in the competitive marketplace for our services; • the spending patterns of customers and governments; • safety performance and reputation; • increased costs of performance of our services caused by adverse weather conditions; • cost overruns on fixed-price and unit-price contracts; • decreased equipment utilization; • delays on projects due to permitting, regulatory issues or customer-caused delays; • disputes with customers relating to payment terms under our contracts and change orders, and our ability to successfully negotiate and obtain payment or reimbursement under our contracts and change orders; • variations in the margins of projects performed during any particular reporting period; • changes in the demand for our services; • schedule delays, equipment and materials availability and increasing insurance, equipment, labor and material costs related to supply chain disruptions, inflationary pressures, recessionary conditions, tariffs, regulatory slowdowns and market disruptions; • the timing and integration of acquisitions and the magnitude of the related acquisition and integration costs; • the loss of a major customer; • changes in the mix of our customers, contracts and business; • the amount of subcontractor and material costs in our projects; • payment risk associated with the financial condition of our customers; • increases in design, construction and operating costs, due to inflation or other unforeseen causes, that we are unable to pass through to our customers; • the termination or expiration of existing agreements; • regional and general economic conditions and the condition of the financial markets; • losses experienced in our operations not otherwise covered by insurance; • costs we incur to support growth internally or otherwise; • availability of qualified labor for specific projects; 11 TABLE OF CONTENTS • supply chain interruptions, including as a result of natural disasters, wildfires, weather, labor disputes, wars, pandemic outbreak of disease, fire or explosions and power outages; • liabilities associated with participation in joint ventures related to third party failures; • the inability to secure sufficient funding to finance continuing operations, fund growth or to provide the required financial resources certain large projects may require; • significant fluctuations in foreign currency exchange rates; • significant fluctuations in interest rates; • changes in bonding requirements applicable to existing and new agreements; • costs associated with our multi-employer pension plan obligations; • the availability or increased cost of equipment; • impairment of goodwill or intangible assets; and • warranty claims.
Certain risks associated with climate change could include but are not limited to: • changes in insurance coverage, availability of coverage, availability of adequate insurance limits, higher insurance premiums, and larger self-insured retentions/deductibles, • changes in market demand based on climate change as well as legal and regulatory requirements and trends, • operational disruptions and accompanying project inefficiencies and delays that may not be recoverable from clients due to severe weather events, • damage from severe weather events to construction work in progress, • damage to our assets from severe weather events, • reputational risk due to perceptions of the company’s sustainability efforts, and • increased reporting and compliance costs due to new regulatory requirements, customer, shareholder, and stakeholder requests targeting climate change. 20 TABLE OF CONTENTS Additionally, legislative and regulatory responses related to climate change and new interpretations of existing laws through climate change litigation may also negatively impact our operations.
Certain risks associated with climate change could include but are not limited to: • changes in insurance coverage, availability of coverage, availability of adequate insurance limits, higher insurance premiums, and larger self-insured retentions/deductibles, • changes in market demand based on climate change as well as legal and regulatory requirements and trends, • operational disruptions and accompanying project inefficiencies and delays that may not be recoverable from clients due to severe weather events and changes in weather patterns, • damage from severe weather events to construction work in progress, • damage to our assets from severe weather events, • reputational risk due to perceptions of the company’s sustainability efforts, and • increased reporting and compliance costs due to new regulatory requirements, customer, shareholder, and stakeholder requests targeting climate change. 20 TABLE OF CONTENTS Additionally, legislative and regulatory responses related to climate change and new interpretations of existing laws through climate change litigation may also negatively impact our operations.
While we generally require suppliers to provide us warranties that are consistent with those we provide to the customers, if any of these suppliers default on their warranty obligations to us, we may incur costs to repair or replace the defective materials for which we are not reimbursed.
While we generally require suppliers to provide us warranties that are consistent with those we provide to our customers, if any of these suppliers default on their warranty obligations to us, we may incur costs to repair or replace the defective materials for which we are not reimbursed.
An increase in the cost or availability for items such as materials, parts, commodities, equipment and tooling may also be impacted by trade regulations, tariffs, global relations, taxes, transportation costs and inflation which could adversely affect our business.
An increase in the cost or availability for items such as materials, parts, commodities, equipment and tooling may also be impacted by trade regulations, tariffs, global relations, wars, taxes, transportation costs and inflation which could adversely affect our business.
We maintain insurance policies with respect to automobile liability, general liability, employer’s liability, workers’ compensation, our employee group health program, and other types of coverages, but these policies are subject to high deductibles, and we are self-insured up to the amount of those deductibles.
We maintain insurance policies with respect to automobile liability, general liability, employer’s liability, workers’ compensation, cybersecurity, our employee group health program, and other types of coverages, but these policies are subject to high deductibles, and we are self-insured up to the amount of those deductibles.
Future pandemic outbreaks of disease may further disrupt global supply chains and create significant additional volatility and disruption of financial markets, which may require us to make changes to our business and, implement new health and safety protocols.
Future pandemic outbreaks of disease may further disrupt supply chains and create significant additional volatility and disruption of financial markets, which may require us to make changes to our business and, implement new health and safety protocols.
These difficulties may be the result of delays in designs; engineering information or materials provided by the customer or a third party; delays or difficulties in equipment and material delivery; schedule changes; delays from our customer’s failure to timely obtain permits, rights-of-way or to meet other regulatory requirements; weather-related delays; delays caused by difficult worksite environments; delays caused by inefficiencies and not achieving expected labor performance and other factors, some of which are beyond our control.
These difficulties have and may continue to be the result of delays in designs; engineering information or materials provided by the customer or a third party; delays or difficulties in equipment and material delivery; schedule changes; delays from our customer’s failure to timely obtain permits, rights-of-way or to meet other regulatory requirements; weather-related delays; delays caused by difficult worksite environments; delays caused by inefficiencies and not achieving expected labor performance and other factors, some of which are beyond our control.
There can be no assurance that any of our existing insurance coverages will be renewed upon the expiration of the coverage period or that future coverage will be available at reasonable and competitive rates or at the required limits. The cost of our insurance has significantly increased and may continue to increase in the future.
There can be no assurance that any of our existing insurance coverages will be renewed upon the expiration of the coverage period or that future coverage will be available at reasonable and competitive rates or at the required limits. The cost of our insurance has significantly increased over time and may continue to increase in the future.
Our ability to grow and maintain our competitive position may be affected by our ability to successfully integrate any businesses acquired. 13 TABLE OF CONTENTS Business and Operating Risks Project performance issues, including those caused by third parties, or certain contractual obligations may result in additional costs to us, reductions or delays in revenues or the payment of penalties, including liquidated damages.
Our ability to grow and maintain our competitive position may be affected by our ability to successfully integrate any businesses acquired. 13 TABLE OF CONTENTS Business and Operating Risks Project performance issues, including those caused by third parties, or certain contractual obligations have in the past and may in the future result in additional costs to us, reductions or delays in revenues or the payment of penalties, including liquidated damages.
A reduction in cash flow or the lack of availability of debt or equity financing may result in a reduction in our customers’ spending for our services and may also impact the ability of our customers to pay amounts owed to us, which could have a material adverse effect on our operations and our ability to grow at historical levels, or at all.
A reduction in cash flow, the lack of availability of debt or equity financing, or a higher cost of debt or equity financing may result in a reduction in our customers’ spending for our services and may also impact the timing or ability of our customers to pay amounts owed to us, which could have a material adverse effect on our operations and our ability to grow at historical levels, or at all.
Many projects involve challenging engineering, procurement and construction phases that may occur over several years. We may encounter difficulties that impact our ability to complete the project in accordance with the original delivery schedule.
Many projects involve challenging engineering, procurement and construction phases that may occur over several years. We have in the past and may in the future encounter difficulties that impact our ability to complete the project in accordance with the original delivery schedule.
Our customers may change or delay various elements of the project after its commencement. The design, engineering information, equipment or materials that are to be provided by the customer or other parties may be deficient or delivered later than required by the project schedule, resulting in additional direct or indirect costs.
Our customers have in the past and may in the future change or delay various elements of the project after its commencement. The design, engineering information, equipment or materials that are to be provided by the customer or other parties may be deficient or delivered later than required by the project schedule, resulting in additional direct or indirect costs.
Employee Risks Work stoppages or other labor issues with our unionized workforce could adversely affect our business, and we may be subject to unionization attempts. As of December 31, 2022, approximately 86% of our craft labor employees were covered by collective bargaining agreements.
Employee Risks Work stoppages or other labor issues with our unionized workforce could adversely affect our business, and we may be subject to unionization attempts. As of December 31, 2023, approximately 84% of our craft labor employees were covered by collective bargaining agreements.
Such effects may be material and the potential impacts include, but are not limited to: • disruptions in our supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities; • reductions in our operating effectiveness due to workforce disruptions resulting from “shelter-in-place” and “stay-at-home” orders, and the unavailability of key personnel necessary to conduct our business activities; and • volatility in the global financial markets, which could have a negative impact on our ability to access capital and additional sources of financing in the future.
Such effects may be material and the potential impacts include, but are not limited to: • disruptions in our supply chain due to transportation delays, travel restrictions, raw material cost increases and shortages, and closures of businesses or facilities; • reductions in our operating effectiveness due to workforce disruptions or the unavailability of key personnel necessary to conduct our business activities; and • volatility in the financial markets, which could have a negative impact on our ability to access capital and additional sources of financing in the future.
There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid. During the ordinary course of our business, we may become subject to lawsuits or indemnity claims.
There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid. During the ordinary course of our business, we have in the past and may in the future become subject to lawsuits or indemnity claims.
Negative economic and market conditions including tariffs on materials and recessionary conditions may in the future adversely impact our customers’ spending and, as a result, our operations and growth.
Negative economic and market conditions including tariffs on materials, interest rates and recessionary conditions have in the past and may in the future adversely impact our customers’ spending and, as a result, our operations and growth.
These variations are influenced by weather, hours of daylight, customer spending patterns, available system outages from utilities and holidays, and can have a significant impact on our gross margins. Our profitability may decrease during the winter months and during severe weather conditions because work performed during these periods may be restricted and more costly to complete.
These variations are influenced by weather, hours of daylight, customer spending patterns, available system outages from utilities and holidays, and can have a significant impact on our gross margins. Our profitability may decrease during abnormal or inclement weather conditions because work performed during these times may be restricted and more costly to complete.
Consequently, we cannot provide assurance as to our customers’ requirements or our estimates of backlog. See “Item 1. Business — Backlog” for a discussion on how we calculate backlog for our business.
Consequently, we cannot provide assurance of our estimates of backlog. See “Item 1. Business — Backlog” for a discussion on how we calculate backlog for our business.
Our operations are subject to extensive laws and regulations relating to the maintenance of safe conditions in the workplace. While we have invested, and will continue to invest, substantial resources in our occupational health and safety programs, our industry involves a high degree of operational risk, and there can be no assurance that we will avoid significant liability exposure.
While we have invested, and will continue to invest, substantial resources in our occupational health and safety programs, our industry involves a high degree of operational risk, and there can be no assurance that we will avoid significant liability exposure.
We may experience difficulties in acquiring equipment or materials due to supply chain interruptions, including as a result of natural disasters, weather, labor disputes, pandemic outbreak of disease, fire or explosions and power outages. To the extent we cannot engage subcontractors or acquire equipment or materials, we could experience losses in the performance of our operations.
We have in the past and may in the future experience difficulties in acquiring equipment or materials due to supply chain interruptions, including as a result of natural disasters, weather, labor disputes, pandemic outbreak of disease, fire or explosions and power outages.
New cyber-related regulations or other requirements could cause us to incur significant costs, which could have an adverse effect on our business, financial position, results of operations and cash flows. Item 1B. Unresolved Staff Comments None.
The continuing and evolving threat of cyber-attacks has also resulted in increased regulatory focus on risk management and prevention. New cyber-related regulations or other requirements could cause us to incur significant costs, which could have an adverse effect on our business, financial position, results of operations and cash flows. Item 1B. Unresolved Staff Comments None.
Additionally, some of our fixed price contracts do not allow us to adjust our prices and, as a result, increases in the cost of parts, commodities, equipment and tooling or fuel costs could reduce our profitability with respect to such projects and could have a material adverse effect on our business, financial condition, results of operations and cash flows Capital and Credit Risks We may not be able to compete for, or work on, certain projects if we are not able to obtain necessary bonds, letters of credit, bank guarantees or other financial assurances.
Additionally, some of our fixed price contracts do not allow us to adjust our prices and, as a result, increases in the cost of parts, commodities, equipment and tooling or fuel costs could reduce our profitability with respect to such projects and could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are assessing these impacts on our condensed consolidated financial statements. The nature of our business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability. Our customer contracts typically include a warranty for the services that we provide against certain defects in workmanship and material.
The nature of our business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability. Our customer contracts typically include a warranty for the services that we provide against certain defects in workmanship and material. Additionally, materials used in construction are often provided by the customer or are warranted against defects from the supplier.
In addition, we cannot predict the ultimate impact of any pandemic outbreak of disease will have on our customers and suppliers, and any adverse impacts on these parties may have a material adverse impact on our business. Third Party Partner Risks Our dependence on suppliers, subcontractors and equipment manufacturers could expose us to the risk of loss in our operations.
In addition, we cannot predict the ultimate impact of any pandemic outbreak of disease will have on our customers and suppliers, and any adverse impacts on these parties may have a material adverse impact on our business.
If the IT systems, networks or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of sensitive information, we may suffer interruptions in our ability to manage operations, be subject to government enforcement actions, litigation, and reputational, competitive and business harm which may adversely impact our business, financial position, results of operations and cash flows, competitive position and reputation. 23 TABLE OF CONTENTS As techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.
If the IT systems, networks or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of sensitive information, we may suffer interruptions in our ability to manage operations, be subject to government enforcement actions, litigation, and reputational, competitive and business harm which may adversely impact our business, financial position, results of operations and cash flows, competitive position and reputation.
While we believe we can increase our prices to adjust for cost increases, there can be no assurance that future cost increases would be recoverable.
We are also exposed to increases in energy prices, particularly as they relate to fuel prices for our fleet vehicles. While we believe we can increase our prices to adjust for cost increases, there can be no assurance that future cost increases would be recoverable.
If government agencies determine that we engaged in improper activity, we may be subject to civil and criminal penalties. Government contracts are also subject to renegotiation of profit and termination by the government prior to the expiration of the term.
If government agencies determine that we engaged in improper activity, we may be subject to civil and criminal penalties.
Although we are not dependent on any single supplier, subcontractor or equipment manufacturer, any substantial limitation on the availability of required suppliers, subcontractors or equipment manufacturers could negatively impact our operations. The risk of a lack of available suppliers, subcontractors or equipment manufacturers may be heightened as a result of market and economic conditions.
We also rely on equipment manufacturers to provide us with the equipment required to conduct our operations. Although we are not dependent on any single supplier, subcontractor or equipment manufacturer, any substantial limitation on the availability of required suppliers, subcontractors or equipment manufacturers could negatively impact our operations.
To date, no cybersecurity incident or attack has had a material impact on our business or results of operations. If a material, actual or perceived breach of our security occurs, the public perception of the effectiveness of our security measures could be harmed and we could lose customers.
If a material, actual or perceived breach of our security occurs, the public perception of the effectiveness of our security measures could be harmed and we could lose customers. Any such material disruptions or breaches of security would have a material adverse effect on our business, financial position, results of operations and cash flows.
Additionally, materials used in construction are often provided by the customer or are warranted against defects from the supplier. Certain projects have longer warranty periods and include facility performance warranties that may be broader than the warranties we generally provide.
Certain projects have longer warranty periods and include facility performance warranties that may be broader than the warranties we generally provide.
On certain projects, we rely on suppliers to obtain the necessary materials and subcontractors to perform portions of our services. We also rely on equipment manufacturers to provide us with the equipment required to conduct our operations.
Third Party Partner Risks Our dependence on suppliers, subcontractors and equipment manufacturers have in the past and may in the future expose us to the risk of loss in our operations. On certain projects, we rely on suppliers to obtain the necessary materials and subcontractors to perform portions of our services.
These factors could result in fewer clean energy projects and a delay in the construction of these projects and the related infrastructure, which could negatively impact our business. We may incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters, including those related to environmental hazards such as wildfires and other natural disasters.
We have in the past and may in the future incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters, including those related to environmental hazards such as wildfires and other natural disasters. Our operations are subject to extensive laws and regulations relating to the maintenance of safe conditions in the workplace.
Stagnant or declining economic conditions could result in the delay, reduction or cancellation of certain projects and could cause our customers to outsource less work, which could adversely affect us in the future. Additionally, many of our customers finance their projects through the incurrence of debt or the issuance of equity.
Stagnant or declining economic conditions could result in the delay, reduction or cancellation of certain projects and could cause our customers to outsource less work, which could adversely affect us in the future. Negative economic changes could be magnified by adverse rate cases limiting the capital expenditure budgets of our customers and leading to lower demand for our services.
These costs could be materially impacted by general market conditions and other factors, including U.S. trade relationships with other countries or the imposition of tariffs. We are also exposed to increases in energy prices, particularly as they relate to fuel prices for our fleet vehicles.
In addition, our customers’ capital budgets may be impacted by cost increases and reduced customer spending could lead to fewer project awards and more competition. These costs could be materially impacted by general market conditions and other factors, including U.S. trade relationships with other countries or the imposition of tariffs.
Any such material disruptions or breaches of security would have a material adverse effect on our business, financial position, results of operations and cash flows. In addition, current and future laws and regulations governing data privacy and the unauthorized disclosure of confidential information may pose complex compliance challenges and/or result in additional costs.
In addition, current and future laws and regulations governing data privacy and the unauthorized disclosure of confidential information may pose complex compliance challenges and/or result in additional costs. A failure to comply with such laws and regulations could result in penalties or fines, legal liabilities and/or harm our reputation.
Successful completion of our contracts may depend on whether our subcontractors successfully fulfill their contractual obligations.
To the extent we cannot engage subcontractors or acquire equipment or materials, we could experience losses in the performance of our operations. Successful completion of our contracts may depend on whether our subcontractors successfully fulfill their contractual obligations.
We have experienced, and may continue to experience, delays and cost volatility of these items due to recent supply chain disruptions, inflationary pressures, tariffs, regulatory slowdowns and the continued market disruption from the COVID-19 pandemic. In addition, our customers’ capital budgets may be impacted by cost increases and reduced customer spending could lead to fewer project awards and more competition.
We have experienced, expect to continue to be affected through 2024, and may in the future be impacted by, delays and cost volatility of these items due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns.
Furthermore, our relationships with, and access provided to, third parties and their vendors may create difficulties in anticipating and implementing adequate preventative measures or mitigating harms after an attack or breach occurs. During the normal course of business, we have experienced and expect to continue to experience attempts to compromise our information and communications technology and related systems.
Additionally, due to recent increases in cyber losses by the insurance industry, cyber insurance coverage may be limited and/or subject to a significant increase in cost. Furthermore, our relationships with, and access provided to, third parties and their vendors may create difficulties in anticipating and implementing adequate preventative measures or mitigating harms after an attack or breach occurs.
This could also impact the cost and availability of cyber insurance to us. Additionally, due to recent increases in cyber losses by the insurance industry, cyber insurance coverage may be limited and/or subject to a significant increase in cost.
This could also impact the cost and availability of cyber insurance to us. While we maintain cybersecurity insurance, costs related to a cyberattack may exceed the amount of our insurance coverage or may be excluded under the terms of our cybersecurity insurance policy.
Removed
Changes in the operating environment, including changes in tax laws, could materially impact our income tax liabilities The Inflation Reduction Act was enacted on August 16, 2022, and includes a number of provisions that may impact the Company, including a corporate alternative minimum tax on certain large corporations, incentives to address climate change mitigation and other non-income tax provisions, including an excise tax on the repurchase of our stock.
Added
Additionally, many of our customers finance their projects through the incurrence of debt or the issuance of equity.
Removed
The failure of these systems to operate effectively or problems with transitioning to upgraded or replacement systems could cause delays and reduce the efficiency of our operations, which could have a material adverse effect on our business, financial position, results of operations and cash flows, and significant costs could be incurred to remediate any problem.
Added
Our interpretation of these tax laws has in the past and may in the future differ from the interpretation of taxing authorities. Changes in the operating environment, including changes in tax laws, as well as differences in the interpretation of tax laws, could materially impact our income tax liabilities.
Removed
A failure to comply with such laws and regulations could result in penalties or fines, legal liabilities and/or harm our reputation. The continuing and evolving threat of cyber-attacks has also resulted in increased regulatory focus on risk management and prevention.
Added
The risk of a lack of available suppliers, subcontractors or equipment manufacturers may be heightened as a result of market and economic conditions.
Added
These factors could result in fewer clean energy projects and a delay in the construction of these projects and the related infrastructure, which could negatively impact our business.
Added
Government contracts are also subject to renegotiation of profit and termination by the government prior to the expiration of the term and are susceptible to a government shutdowns or a change in budgetary priorities which could lead to the cancellation of the award, unanticipated costs and delays.
Added
Capital and Credit Risks We may not be able to compete for, or work on, certain projects if we are not able to obtain necessary bonds, letters of credit, bank guarantees or other financial assurances.
Added
Unfavorable developments affecting the banking and financial services industry could adversely affect our business, liquidity and financial condition and overall results of operations.
Added
Actual events, concerns or speculation about disruption or instability in the banking and financial services industry, such as liquidity constraints, the failure of individual institutions, or the inability of individual institutions or the banking and financial service industry generally to meet their contractual obligations, could significantly impair our access to capital, delay access to deposits or other financial assets, or cause actual loss of funds subject to cash management arrangements.
Added
Similarly, these events, concerns or speculation could result in less favorable financing terms such as higher interest rates or costs and stricter covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
Added
Additionally, our customers also could be adversely affected by these risks, which in turn could result in their committing a breach or default under their contractual agreements with us, their insolvency or bankruptcy, or other adverse effects.
Added
Any decline in available funding, limitation on access to our cash and liquidity resources, or non-compliance of banking and financial services counterparties with their contractual commitments to us could, among other risk, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Added
As techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.
Added
During the normal course of business, we have experienced and expect to continue to experience attempts to compromise our information and communications technology and related systems. To date, no cybersecurity incident or attack has had a material impact on our business or results of operations.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeAs of December 31, 2022, we owned 18 operating facilities and leased many other properties in various locations throughout our service territories. Most of our properties are used as operational offices or for fleet operations. We believe that our facilities are adequate for our current operating needs.
Biggest changeAs of December 31, 2023, we owned 19 operating facilities and leased many other properties in various locations throughout our service territories. Most of our properties are used as operational offices or for fleet operations. We believe that our facilities are adequate for our current operating needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed6 unchanged
Biggest changeHowever, if facts and circumstances change in the future, we cannot be certain that an adverse outcome of one or more of these claims would not have a material adverse effect on our financial condition, results of operations, or cash flows. Item 4. Mine Safety Disclosures Not Applicable. 24 TABLE OF CONTENTS PART II
Biggest changeHowever, if facts and circumstances change in the future, we cannot be certain that an adverse outcome of one or more of these claims would not have a material adverse effect on our financial condition, results of operations, or cash flows. Item 4. Mine Safety Disclosures Not Applicable. 25 TABLE OF CONTENTS PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−0 removed6 unchanged
Biggest changeAll right reserved. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 MYR Group Inc. 100.00 78.84 91.21 168.21 309.40 257.68 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 Peer Group 100.00 76.05 101.40 132.33 190.33 200.51 Item 6. [Reserved] 26 TABLE OF CONTENTS
Biggest changeAll right reserved. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 MYR Group Inc. 100.00 115.69 213.35 392.44 326.84 513.42 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Peer Group 100.00 133.33 173.99 250.26 263.64 364.72 Item 6. [Reserved] 27 TABLE OF CONTENTS
The stock price performance reflected on the following graph is not necessarily indicative of future stock price performance. 25 TABLE OF CONTENTS The companies in the Peer Group were selected because they comprise a broad group of publicly traded companies, each of which has some operations similar to ours.
The stock price performance reflected on the following graph is not necessarily indicative of future stock price performance. 26 TABLE OF CONTENTS The companies in the Peer Group were selected because they comprise a broad group of publicly traded companies, each of which has some operations similar to ours.
The following graph compares, for the period from December 31, 2017 to December 31, 2022, the cumulative total shareholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Russell 2000 Index, and a peer group index selected by our management that includes eleven publicly traded companies within our industry (the “Peer Group”).
The following graph compares, for the period from December 31, 2018 to December 31, 2023, the cumulative total shareholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Russell 2000 Index, and a peer group index selected by our management that includes eleven publicly traded companies within our industry (the “Peer Group”).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among MYR Group, Inc., the S&P 500 Index, the Russell 2000 Index, and a Peer Group *$100 invested on 12/31/2017 in stock or including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved Copyright© 2023 Russell Investment Group.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among MYR Group, Inc., the S&P 500 Index, the Russell 2000 Index, and a Peer Group *$100 invested on 12/31/2018 in stock or including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2024 Standard & Poor's, a division of S&P Global. All rights reserved Copyright© 2024 Russell Investment Group.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $0.01, is listed on The Nasdaq Global Market under the symbol “MYRG.” Holders of Record As of February 17, 2023, we had 6 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our common stock, par value $0.01, is listed on The Nasdaq Global Market under the symbol “MYRG.” Holders of Record As of February 23, 2024, we had 6 holders of record of our common stock.
The comparison assumes that $100 was invested on December 31, 2017 and further assumes any dividends were reinvested quarterly.
The comparison assumes that $100 was invested on December 31, 2018 and further assumes any dividends were reinvested quarterly.
The Repurchase Program will expire on May 8, 2023, or when the authorized funds are exhausted, whichever is earlier. As of December 31, 2022, the Company had $75.0 million of remaining availability to repurchase shares of the Company’s common stock under the Repurchase Program.
The Repurchase Program will expire on May 8, 2024, or when the authorized funds are exhausted, whichever is earlier. As of December 31, 2023, the Company had repurchased 21,944 shares of its common stock under the Repurchase Program and had $72.5 million of remaining availability to repurchase shares of the Company’s common stock under the Repurchase Program.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2022 - October 31, 2022 44,015 $ 82.12 44,015 $ 38,018,311 November 1, 2022 - November 30, 2022 — $ — — $ 75,000,000 December 1, 2022 - December 31, 2022 — $ — — $ 75,000,000 Total 44,015 $ 82.12 44,015 (1) On November 2, 2022, the Company announced that its Board of Directors had authorized a new $75.0 million share repurchase program (the "Repurchase Program"), which became effective on November 8, 2022.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 - October 31, 2023 — $ — — $ 75,000,000 November 1, 2023 - November 30, 2023 25,042 $ 114.55 25,042 $ 72,487,423 December 1, 2023 - December 31, 2023 — $ — — $ 72,487,423 Total 25,042 $ 114.55 25,042 (1) On November 1, 2023, the Company announced that its Board of Directors had authorized a new $75.0 million share repurchase program (the "Repurchase Program"), which became effective on November 9, 2023.
The Company’s prior $75.0 million repurchase program that was announced on May 4, 2022 and commenced on May 5, 2022 expired on November 7, 2022.
The Company’s prior $75.0 million repurchase program that was announced on May 2, 2023 and commenced on May 9, 2023 expired on November 8, 2023. The Company repurchased 3,098 shares of its common stock under this prior repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

117 edited+17 added−13 removed113 unchanged
Biggest changeSelling, General and Administrative Expenses Selling, general and administrative expenses (“SG&A”) consist primarily of compensation, related benefits and employee costs for management and administrative personnel, office rent and utilities, stock compensation, communications, professional fees, depreciation, IT expenses, marketing costs and bad debt expense. 32 TABLE OF CONTENTS Consolidated Results of Operations The following table sets forth selected statements of operations data and such data as a percentage of revenues for the years indicated: Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 For the year ended December 31, (dollars in thousands) 2022 2021 Contract revenues $ 3,008,542 100.0 % $ 2,498,289 100.0 % Contract costs 2,664,580 88.6 2,173,308 87.0 Gross profit 343,962 11.4 324,981 13.0 Selling, general and administrative expenses 222,424 7.4 207,208 8.3 Amortization of intangible assets 9,009 0.3 2,311 0.1 Gain on sale of property and equipment (2,378) (0.1) (3,098) (0.1) Income from operations 114,907 3.8 118,560 4.7 Other income (expense): Interest income 187 — 70 — Interest expense (3,563) (0.1) (1,799) (0.1) Other income (expense), net 2,673 0.1 (525) — Income before provision for income taxes 114,204 3.8 116,306 4.6 Income tax expense 30,823 1.0 31,300 1.2 Net income 83,381 2.8 85,006 3.4 Less: net loss attributable to noncontrolling interest — — (4) — Net income attributable to MYR Group Inc. $ 83,381 2.8 % $ 85,010 3.4 % Revenues.
Biggest changeSelling, General and Administrative Expenses Selling, general and administrative expenses (“SG&A”) consist primarily of compensation, related benefits and employee costs for management and administrative personnel, office rent and utilities, stock compensation, communications, professional fees, depreciation, IT expenses, marketing costs and bad debt expense. 33 TABLE OF CONTENTS Consolidated Results of Operations The following table sets forth selected statements of operations data and such data as a percentage of revenues for the years indicated: Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 For the year ended December 31, (dollars in thousands) 2023 2022 Contract revenues $ 3,643,905 100.0 % $ 3,008,542 100.0 % Contract costs 3,279,508 90.0 2,664,580 88.6 Gross profit 364,397 10.0 343,962 11.4 Selling, general and administrative expenses 234,611 6.5 222,424 7.4 Amortization of intangible assets 4,907 0.1 9,009 0.3 Gain on sale of property and equipment (4,214) (0.1) (2,378) (0.1) Income from operations 129,093 3.5 114,907 3.8 Other income (expense): Interest income 888 — 187 — Interest expense (4,939) (0.1) (3,563) (0.1) Other income (expense), net (38) — 2,673 0.1 Income before provision for income taxes 125,004 3.4 114,204 3.8 Income tax expense 34,014 0.9 30,823 1.0 Net income 90,990 2.5 83,381 2.8 Revenues.
We believe legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and clean energy spending. We believe the legislative actions are likely to provide greater long-term opportunity in both of our reporting segments.
We believe legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and clean energy spending. We believe legislative actions are likely to provide greater long-term opportunity in both of our reporting segments.
Revenue associated with contracts with customers is recognized over time as our performance creates or enhances customer-controlled assets or creates or enhances an asset with no alternative use, for which we have an enforceable right to receive compensation as defined under the contract.
Revenue associated with contracts with customers is recognized over time as our performance creates or enhances customer-controlled assets or creates or enhances an asset with no alternative use, for which we have an enforceable right to receive compensation as defined under the contract.
As the cost-to-cost method is driven by incurred cost, we calculate the percentage of completion by dividing costs incurred to date by the total estimated cost. The percentage of completion is then multiplied by estimated revenues to determine inception-to-date revenue. Revenue recognized for the period is the current inception-to-date recognized revenue less the prior period inception-to-date recognized revenue.
As the cost-to-cost method is driven by incurred cost, we calculate the percentage of completion by dividing costs incurred to date by the total estimated cost. The percentage of completion is then multiplied by estimated revenues to determine inception-to-date revenue. Revenue recognized for the period is the current inception-to-date recognized revenue less the prior period inception-to-date recognized revenue.
We determine compensation expense for stock-based awards based on the estimated fair values at the grant date and recognize the related compensation expense ratably over the vesting period. We use the straight-line amortization method to recognize compensation expense related to stock-based awards, such as restricted stock and restricted stock units, that have only service conditions.
We determine compensation expense for stock-based awards based on the estimated fair values at the grant date and recognize the related compensation expense ratably over the vesting period. We use the straight-line amortization method to recognize compensation expense related to stock-based awards, such as restricted stock units, that have only service conditions.
In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure which has challenged the capacity of public water and transportation infrastructure forcing states and municipalities to seek creative means to fund needed expansion and repair. We believe the need for expanding public infrastructure will offer opportunity in our C&I segment for several years.
In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure which have challenged the capacity of public water and transportation infrastructure forcing states and municipalities to seek creative means to fund needed expansion and repair. We believe the need for expanding public infrastructure will offer opportunity in our C&I segment for several years.
Non-compliance with these financial covenants under the Credit Agreement — our interest coverage ratio which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement) and our leverage ratio, which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement), divided by Consolidated EBITDA (as defined in the Credit Agreement) — could result in our lenders requiring us to immediately repay all amounts borrowed.
Non-compliance with these financial covenants under the Credit Agreement — our interest coverage ratio which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement) and our net leverage ratio, which is defined in the Credit Agreement as Total Net Indebtedness (as defined in the Credit Agreement), divided by Consolidated EBITDA (as defined in the Credit Agreement) — could result in our lenders requiring us to immediately repay all amounts borrowed.
In addition, from time to time certain customers require us to post letters of credit to ensure payment to our subcontractors and vendors and guarantee performance under our contracts. Such letters of credit are generally issued by a bank or similar financial institution typically pursuant to our senior credit facility.
In addition, from time to time, certain customers or our sureties require us to post letters of credit to ensure payment to our subcontractors and vendors and guarantee performance under our contracts. Such letters of credit are generally issued by a bank or similar financial institution typically pursuant to our senior credit facility.
The $185.7 million of cash used in investing activities in the year ended December 31, 2022 consisted of $110.7 million to acquire the Powerline Plus Companies, $77.1 million for capital expenditures, partially offset by $2.0 million of proceeds from the sale of equipment.
The $185.7 million of cash used in investing activities in the year ended December 31, 2022 consisted of $110.7 million to acquire the Powerline Plus Companies and $77.1 million for capital expenditures, partially offset by $2.0 million of proceeds from the sale of equipment.
Generally, no profit is recognized on a claim until final settlement occurs. Seasonal, Weather and Geographical. Seasonal patterns, primarily related to weather conditions and the availability of system outages, can have a significant impact on gross margins in a given period.
Generally, no profit is recognized on a claim until final settlement occurs. Seasonal, Weather and Geographical. Seasonal and changing patterns, primarily related to weather conditions and the availability of system outages, can have a significant impact on gross margins in a given period.
We generally focus on managing our profitability by: selecting projects that we believe will provide attractive margins; actively monitoring the costs of completing our projects; holding customers accountable for costs related to changes to contract specifications and rewarding our employees for controlling costs. 28 TABLE OF CONTENTS The demand for construction and maintenance services from our customers has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the markets we serve as well as the economy in general.
We generally focus on managing our profitability by: selecting projects that we believe will provide attractive margins; actively monitoring the costs of completing our projects; holding customers accountable for costs related to changes to contract specifications and rewarding our employees for controlling costs. 29 TABLE OF CONTENTS The demand for construction and maintenance services from our customers has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the markets we serve as well as the economy in general.
Additionally, from time to time we are required to post letters of credit to guarantee the obligations of our wholly-owned subsidiaries, which reduces the borrowing availability under our credit facility. 39 TABLE OF CONTENTS Concentration of Credit Risk We grant trade credit under contractual payment terms, generally without collateral, to our customers, which include high credit quality electric utilities, governmental entities, general contractors and builders, owners and managers of commercial and industrial properties.
Additionally, from time to time we are required to post letters of credit to guarantee the obligations of our wholly-owned subsidiaries, which reduces the borrowing availability under our credit facility. 40 TABLE OF CONTENTS Concentration of Credit Risk We grant trade credit under contractual payment terms, generally without collateral, to our customers, which include high credit quality electric utilities, governmental entities, general contractors and builders, owners and managers of commercial and industrial properties.
We utilized the cost-to-cost method as we believe cost incurred best represents the amount of work completed and remaining on our projects, and is the most common basis for computing percentage of completion in our industry. For purposes of recognizing revenue, we follow the five-step approach outlined in Accounting Standards Codification (“ASC”) 606-10-25.
We utilized the cost-to-cost method as we believe cost incurred best represents the amount of work completed and remaining on our projects, and is the most common basis for computing percentage of completion in our industry. For purposes of recognizing revenue, we follow the five-step approach outlined in Accounting Standards Codification (“ASC”) 606.
Some of our contracts may have contract terms that include variable consideration such as safety or performance bonuses or liquidated damages. In accordance with ASC 606-10-32, we estimate the variable consideration using one of two methods. In contracts in which there is a binary outcome, the most likely amount method is used.
Some of our contracts may have contract terms that include variable consideration such as safety or performance bonuses or liquidated damages. In accordance with ASC 606, we estimate the variable consideration using one of two methods. In contracts in which there is a binary outcome, the most likely amount method is used.
We analyze specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible the account balance is written-off against the allowance for doubtful accounts. 42 TABLE OF CONTENTS
We analyze specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is deemed to be uncollectible the account balance is written-off against the allowance for doubtful accounts. 43 TABLE OF CONTENTS
These factors include: the mix of revenue derived from the industries we serve, the size and duration of our projects, the mix of business conducted in different parts of the United States and Canada, the mix of service and maintenance work compared to new construction work, the amount of work that we subcontract, the amount of material we supply, changes in labor, equipment or insurance costs, seasonal weather patterns, changes in fleet utilization, pricing pressures due to competition, efficiency of work performance, fluctuations in commodity prices of materials, delays in the timing of projects and other factors.
These factors include: the mix of revenue derived from the industries we serve, the size and duration of our projects, the mix of business conducted in different parts of the United States and Canada, the mix of our contract types, the mix of service and maintenance work compared to new construction work, the amount of work that we subcontract, the amount of material we supply, changes in labor, equipment or insurance costs, seasonal and abnormal weather patterns, changes in fleet utilization, pricing pressures due to competition, efficiency of work performance, fluctuations in commodity prices of materials, delays in the timing of projects and other factors.
In 2022, we continued to see increased bidding activity in some of our electric distribution markets, as economic conditions improved in those areas. We believe the increased storm activity and destruction caused by wildfires will cause a push to strengthen utility distribution systems against catastrophic damage.
In 2023, we continued to see increased bidding activity in some of our electric distribution markets, as economic conditions improved in those areas. We believe the increased storm activity and destruction caused by wildfires will cause a push to strengthen utility distribution systems against catastrophic damage.
The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction. Significant construction on any large, multi-year projects awarded in 2023 will not likely have a large impact on our 2023 results.
The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction. Significant construction on any large, multi-year projects awarded in 2024 will not likely have a large impact on our 2024 results.
However, to the extent payment is required for any of such claims, the amount paid could be material and could adversely affect cash flows. 38 TABLE OF CONTENTS Equipment Notes We have entered into multiple Master Loan Agreements with multiple banks.
However, to the extent payment is required for any such claims, the amount paid could be material and could adversely affect cash flows. 39 TABLE OF CONTENTS Equipment Notes We have entered into multiple Master Loan Agreements with multiple banks.
As of December 31, 2022 and 2021, none of our customers individually exceeded 10.0% of our accounts receivable. New Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 1 — Organization, Business and Significant Accounting Policies in the Notes to our Financial Statements.
As of December 31, 2023 and 2022, none of our customers individually exceeded 10.0% of our accounts receivable. New Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 1 — Organization, Business and Significant Accounting Policies in the Notes to our Financial Statements.
We continue to invest in developing key management and craft personnel in both our T&D and C&I markets and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.
We continue to invest in developing key management and craft personnel in both our T&D and C&I segments and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.
Additionally, the contract liability includes a liability for the excess of costs over revenues for all contracts that are in a loss position. 40 TABLE OF CONTENTS Contract costs incurred to date and expected total contract costs are continuously monitored during the term of the contract.
Additionally, the contract liability includes a liability for the excess of costs over revenues for all contracts that are in a loss position. 41 TABLE OF CONTENTS Contract costs incurred to date and expected total contract costs are continuously monitored during the term of the contract.
We believe the investment in specialized equipment helps to reduce our costs, improve our margins and provide us with valuable flexibility to take on additional and complex projects. 31 TABLE OF CONTENTS Material and Subcontract Costs.
We believe the investment in specialized equipment helps to reduce our costs, improve our margins and provide us with valuable flexibility to take on additional and complex projects. 32 TABLE OF CONTENTS Material and Subcontract Costs.
Changes in backlog from period to period are primarily the result of fluctuations in the timing of awards and revenue recognition of contracts. Backlog should not be relied upon as a stand-alone indicator of future events. 30 TABLE OF CONTENTS Understanding Gross Margins Our gross margin is gross profit expressed as a percentage of revenues.
Changes in backlog from period to period are primarily the result of fluctuations in the timing of awards, type of awards and revenue recognition of contracts. Backlog should not be relied upon as a stand-alone indicator of future events. 31 TABLE OF CONTENTS Understanding Gross Margins Our gross margin is gross profit expressed as a percentage of revenues.
If the carrying value of goodwill or other indefinite lived assets exceeds its implied fair value, an impairment charge would be recorded in the statement of operations. As a result of the annual qualitative review process in 2022 and 2020, we determined it was not necessary to perform a qualitative assessment.
If the carrying value of goodwill or other indefinite lived assets exceeds its implied fair value, an impairment charge would be recorded in the statement of operations. As a result of the annual qualitative review process in 2023 and 2022, we determined it was not necessary to perform a quantitative assessment.
Presentation of Information The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the fiscal years ended December 31, 2021 and 2022.
Presentation of Information The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the fiscal years ended December 31, 2023 and 2022.
Bidding and construction activity for small to medium-size transmission projects and upgrades remain active, and we expect this trend to continue. 29 TABLE OF CONTENTS As a result of reduced spending by United States utilities on their distribution systems for several years, we believe there is a need for sustained investment by utilities on their distribution systems to properly maintain or meet reliability requirements.
Bidding and construction activity for small to medium-size transmission projects and upgrades remain active, and we expect this trend to continue. 30 TABLE OF CONTENTS As a result of reduced spending by United States utilities on their distribution systems for many years, we believe there is a need for sustained investment by utilities on their distribution systems to properly maintain or meet reliability requirements.
In accordance with ASC 606-10-32-11, we include the estimated amount of variable consideration in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative recognized revenue will not occur when the final outcome of the variable consideration is determined.
In accordance with ASC 606, we include the estimated amount of variable consideration in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative recognized revenue will not occur when the final outcome of the variable consideration is determined.
Our T&D segment provides a broad range of services on electric transmission and distribution networks, substation facilities and clean energy projects, which include design, engineering, procurement, construction, upgrade and maintenance and repair services.
Our T&D segment provides a broad range of services on electric transmission and distribution networks, substation facilities, clean energy projects and electric vehicle charging infrastructure, which include design, engineering, procurement, construction, upgrade and maintenance and repair services.
For a discussion of changes from the fiscal year ended December 31, 2020 to the fiscal year ended December 31, 2021, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 (filed February 23, 2022).
For a discussion of changes from the fiscal year ended December 31, 2022 to the fiscal year ended December 31, 2021, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 (filed February 22, 2023).
Measured by revenues in our C&I segment, we provided 83.3%, 80.5% and 82.7% of our services under fixed-price contracts for the years ended December 31, 2022, 2021 and 2020, respectively. Overview-Revenue and Gross Margins Revenue Recognition.
Measured by revenues in our C&I segment, we provided 82.0%, 83.3% and 80.5% of our services under fixed-price contracts for the years ended December 31, 2023, 2022 and 2021, respectively. Overview-Revenue and Gross Margins Revenue Recognition.
For the year ended December 31, 2022, net income was $83.4 million compared to $85.0 million for the year ended December 31, 2021. Overview-Segments Transmission and Distribution segment . Our T&D segment provides comprehensive solutions to providers in the electric utility industry.
For the year ended December 31, 2023, net income was $91.0 million compared to $83.4 million for the year ended December 31, 2022. Overview-Segments Transmission and Distribution segment . Our T&D segment provides comprehensive solutions to providers in the electric utility industry.
In addition, we believe that we are better capitalized than some of our competitors, which provides us with valuable flexibility to take on additional and more complex projects. We had revenues for the year ended December 31, 2022 of $3.01 billion compared to $2.50 billion for the year ended December 31, 2021.
In addition, we believe that we are better capitalized than some of our competitors, which provides us with valuable flexibility to take on additional and more complex projects. We had revenues for the year ended December 31, 2023 of $3.64 billion compared to $3.01 billion for the year ended December 31, 2022.
As is common practice in the industry, we classify all accounts receivable as current assets. The allowance for doubtful accounts associated with account receivables was $2.1 million as of December 31, 2022 and $2.4 million as of December 31, 2021.
As is common practice in the industry, we classify all accounts receivable as current assets. The allowance for doubtful accounts associated with account receivables was $2.0 million as of December 31, 2023 and $2.1 million as of December 31, 2022.
During the year ended December 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4%. During the year ended December 31, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.8%.
During the year ended December 31, 2022, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.4%. During the year ended December 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4%.
We continue to invest in developing key management and craft personnel in both our T&D and C&I markets and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity. In 2022 and 2021, we invested in capital expenditures of approximately $77.1 million and $52.4 million, respectively.
We continue to invest in developing key management and craft personnel in both our T&D and C&I markets and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity. In 2023 and 2022, we invested in capital expenditures of approximately $84.7 million and $77.1 million, respectively.
Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is ongoing and the purchase option price is attractive. The outstanding balance of operating lease obligations was $30.5 million as of December 31, 2022.
Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements. The Company may exercise some of these purchase options when the need for equipment is ongoing and the purchase option price is attractive. The outstanding balance of operating lease obligations was $35.0 million as of December 31, 2023.
Commercial and Industrial segment . Our C&I segment provides a wide range of services including design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting and signalization.
Our C&I segment provides a wide range of services including design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure.
The foregoing factors as well as the stage of completion of contracts in process and the mix of contracts at different margins may cause fluctuations in gross profit between periods. During the year ended December 31, 2022, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.4%.
The foregoing factors as well as the stage of completion of contracts in process and the mix of contracts at different margins may cause fluctuations in gross profit between periods. During the year ended December 31, 2023, changes in estimates pertaining to certain projects decreased consolidated gross margin by 1.7%.
The Company’s leases have remaining terms ranging from one to seven years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year.
The Company’s leases have remaining terms ranging from one to ten years, some of which may include options to extend the leases for up to six years, and some of which may include options to terminate the leases within one year.
As of December 31, 2022 and 2021, we recognized revenues of $19.6 million and $2.4 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects.
As of December 31, 2023 and 2022, we recognized revenues of $76.5 million and $19.6 million, respectively, related to significant change orders and/or claims that had been included as contract price adjustments on certain contracts, some of which are multi-year projects.
Subject to certain exceptions, the Facility is secured by substantially all of our assets and the assets of our domestic subsidiaries and by a pledge of substantially all of the capital stock of our domestic subsidiaries and 65% of the capital stock of our direct foreign subsidiaries.
Subject to certain exceptions, the Facility is secured by substantially all of the assets of the Company and its domestic subsidiaries, and by a pledge of substantially all of the capital stock of the Company’s domestic subsidiaries and 65% of the capital stock of the direct foreign subsidiaries of the Company.
As of December 31, 2022, we had $3.4 million outstanding finance lease obligations, consisting of short-term and long-term finance lease obligations of approximately $1.1 million and $2.3 million, respectively. As of December 31, 2021, we had no outstanding finance lease obligations.
As of December 31, 2023, we had $2.3 million outstanding finance lease obligations, consisting of short-term and long-term finance lease obligations of approximately $2.0 million and $0.3 million, respectively. As of December 31, 2022, we had $3.4 million outstanding finance lease obligations, consisting of short-term and long-term finance lease obligations of approximately $1.1 million and $2.3 million, respectively.
As of December 31, 2022, an aggregate of approximately $1.97 billion in original face amount of bonds issued by our sureties were outstanding. Our estimated remaining cost to complete these bonded projects was approximately $880.2 million as of December 31, 2022.
As of December 31, 2023, an aggregate of approximately $2.44 billion in original face amount of bonds issued by our sureties were outstanding. Our estimated remaining cost to complete these bonded projects was approximately $726.1 million as of December 31, 2023.
During the year ended December 31, 2022, our operating activities provided cash of $167.5 million, compared to $137.2 million for the year ended December 31, 2021. Cash flow from operations is primarily influenced by demand for our services, operating margins, timing of contract performance and the type of services we provide to our customers.
During the year ended December 31, 2023, our operating activities provided cash of $71.0 million, compared to $167.5 million for the year ended December 31, 2022. Cash flow from operations is primarily influenced by operating margins, timing of contract performance and the type of services we provide to our customers.
Our T&D services include the construction and maintenance of high voltage transmission lines, substations, lower voltage underground and overhead distribution systems, clean energy facilities and limited gas construction services. We also provide many services to our customers under multi-year master service agreements (“MSAs”) and other variable-term service agreements.
Our T&D services include the construction and maintenance of high voltage transmission lines, substations and lower voltage underground and overhead distribution systems, clean energy projects and electric vehicle charging infrastructure. We also provide many services to our customers under multi-year master service agreements (“MSAs”) and other variable-term service agreements.
Performance and Payment Bonds and Parent Guarantees Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a financial institution known as a surety. These bonds provide a guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.
Performance and Payment Bonds and Parent Guarantees Many customers, particularly in connection with new construction, require us to post performance and payment bonds typically issued by a surety or insurance company. These bonds provide a guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.
If we fail to perform under a contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We must reimburse our sureties for any expenses or outlays they incur.
If we fail to perform under a contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the respective issuers of the bonds for any claim expenses or outlays they incur.
Gains from the sale of property and equipment are attributable to routine sales of property and equipment that is no longer useful or valuable to our ongoing operations. 33 TABLE OF CONTENTS Interest expense. Interest expense was $3.6 million for the year ended December 31, 2022 compared to $1.8 million for the year ended December 31, 2021.
Gains from the sale of property and equipment are attributable to routine sales of property and equipment that are no longer useful or valuable to our ongoing operations. 34 TABLE OF CONTENTS Interest expense. Interest expense was $4.9 million for the year ended December 31, 2023 compared to $3.6 million for the year ended December 31, 2022.
Using both EBITDA and net income to evaluate the business allows management and investors to (a) assess our relative performance against our competitors and (b) monitor our capacity to generate returns for our shareholders. 35 TABLE OF CONTENTS The following table provides a reconciliation of net income attributable to MYR Group Inc. to EBITDA: For the year ended December 31, (in thousands) 2022 2021 2020 Net income attributable to MYR Group Inc. $ 83,381 $ 85,010 $ 58,759 Net loss - noncontrolling interests — (4) — Net income 83,381 85,006 58,759 Interest expense, net 3,376 1,729 4,554 Income tax expense 30,823 31,300 22,626 Depreciation and amortization 58,170 46,205 46,453 EBITDA $ 175,750 $ 164,240 $ 132,392 We also use EBITDA as a liquidity measure.
Using both EBITDA and net income to evaluate the business allows management and investors to (a) assess our relative performance against our competitors and (b) monitor our capacity to generate returns for our shareholders. 36 TABLE OF CONTENTS The following table provides a reconciliation of net income attributable to MYR Group Inc. to EBITDA: For the year ended December 31, (in thousands) 2023 2022 2021 Net income attributable to MYR Group Inc. $ 90,990 $ 83,381 $ 85,010 Net loss - noncontrolling interests — — (4) Net income 90,990 83,381 85,006 Interest expense, net 4,051 3,376 1,729 Income tax expense 34,014 30,823 31,300 Depreciation and amortization 59,138 58,170 46,205 EBITDA $ 188,193 $ 175,750 $ 164,240 We also use EBITDA as a liquidity measure.
Sales tax and value added tax collected from customers is included in other current liabilities on our consolidated balance sheets. 41 TABLE OF CONTENTS Insurance. We carry insurance policies, which are subject to certain deductibles, for workers’ compensation, general liability, automobile liability and other coverages.
Sales tax and value added tax collected from customers is included in other current liabilities on our consolidated balance sheets. 42 TABLE OF CONTENTS Insurance. We carry insurance policies, which are subject to certain deductibles, for workers’ compensation, general liability, automobile liability and other coverages. Our deductible for each line of coverage is up to $1.0 million.
Amounts borrowed under the Credit Agreement bear interest, at our option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.00% to 0.75%; or (2) Adjusted LIBO Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.00% to 1.75%.
Amounts borrowed under the Credit Agreement bear interest, at the Company’s option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.25% to 1.00%; or (2) the Term Benchmark Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.25% to 2.00%.
For the year ended December 31, 2022, our C&I revenues were $1.26 billion, or 42.0%, of our revenue, compared to $1.20 billion, or 47.9%, of our revenue for the year ended December 31, 2021 and $1.09 billion, or 48.6%, of our revenue for the year ended December 31, 2020.
For the year ended December 31, 2023, our C&I revenues were $1.55 billion, or 42.7%, of our revenue, compared to $1.26 billion, or 42.0%, of our revenue for the year ended December 31, 2022 and $1.20 billion, or 47.9%, of our revenue for the year ended December 31, 2021.
Gross profit increased $19.0 million, or 5.8%, to $344.0 million for year ended December 31, 2022 from $325.0 million for the year ended December 31, 2021, due to higher revenues, partially offset by lower margins. Selling, general and administrative expenses.
Gross profit increased $20.4 million, or 5.9%, to $364.4 million for year ended December 31, 2023 from $344.0 million for the year ended December 31, 2022, due to higher revenues, partially offset by lower margins. Selling, general and administrative expenses.
Gains from the sale of property and equipment in the year ended December 31, 2022 were $2.4 million compared to $3.1 million in the year ended December 31, 2021.
Gain on sale of property and equipment. Gains from the sale of property and equipment in the year ended December 31, 2023 were $4.2 million compared to $2.4 million in the year ended December 31, 2022.
While recorded accruals are based on the ultimate liability, which includes amounts in excess of the deductible, a corresponding receivable for amounts in excess of the deductible is included in current assets on our consolidated balance sheets. Stock-Based Compensation.
The insurance and claims accruals are based on known facts, actuarial estimates and historical trends. While recorded accruals are based on the ultimate liability, which includes amounts in excess of the deductible, a corresponding receivable for amounts in excess of the deductible is included in current assets on our consolidated balance sheets. Stock-Based Compensation.
The majority of C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities and transportation control and management systems.
The majority of C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting, signalization and electric vehicle charging infrastructure.
Income tax expense was $30.8 million for the year ended December 31, 2022, with an effective tax rate of 27.0%, compared to $31.3 million for the year ended December 31, 2021, with an effective tax rate of 26.9%.
Income tax expense was $34.0 million for the year ended December 31, 2023, with an effective tax rate of 27.2%, compared to $30.8 million for the year ended December 31, 2022, with an effective tax rate of 27.0%.
As of December 31, 2022, we had outstanding short-term and long-term operating lease obligations of approximately $9.7 million and $20.8 million, respectively. The outstanding balance of operating lease obligations was $21.0 million as of December 31, 2021. As of December 31, 2021, we had outstanding short-term and long-term operating lease obligations of approximately $7.8 million and $13.2 million, respectively.
As of December 31, 2023, we had outstanding short-term and long-term operating lease obligations of approximately $9.2 million and $25.8 million, respectively. The outstanding balance of operating lease obligations was $30.5 million as of December 31, 2022. As of December 31, 2022, we had outstanding short-term and long-term operating lease obligations of approximately $9.7 million and $20.8 million, respectively.
In both cases, projects may be delayed or temporarily placed on hold. Conversely, in periods when weather remains dry and temperatures are moderate, more work can be done, sometimes with less cost, which would have a favorable impact on gross margins.
Conversely, in periods when weather remains dry and temperatures are moderate, more work can be done, sometimes with less cost, which would have a favorable impact on gross margins.
We have provided electrical contracting services for commercial and industrial construction since 1912. Our C&I segment provides services in the United States and in western Canada. Our C&I customers include facility owners and general contractors.
We have provided electrical contracting services for commercial and industrial construction since 1912. Our C&I segment provides services in the United States and in western Canada. Our C&I customers include facility owners and general contractors. We strive to maintain our status as a preferred provider to our T&D and C&I customers.
The following table provides a reconciliation of net cash flows provided by operating activities to EBITDA: For the year ended December 31, (in thousands) 2022 2021 2020 Net cash flows provided by operating activities $ 167,484 $ 137,228 $ 175,167 Add/(subtract) Changes in operating assets and liabilities (8,522) 6,554 (67,770) Adjustments to reconcile net income to net cash flows provided by operating activities (75,581) (58,776) (48,638) Depreciation and amortization 58,170 46,205 46,453 Income tax expense 30,823 31,300 22,626 Interest expense, net 3,376 1,729 4,554 EBITDA $ 175,750 $ 164,240 $ 132,392 Working Capital Working capital is a non-GAAP measure.
The following table provides a reconciliation of net cash flows provided by operating activities to EBITDA: For the year ended December 31, (in thousands) 2023 2022 2021 Net cash flows provided by operating activities $ 71,016 $ 167,484 $ 137,228 Add/(subtract) Changes in operating assets and liabilities 85,426 (8,522) 6,554 Adjustments to reconcile net income to net cash flows provided by operating activities (65,452) (75,581) (58,776) Depreciation and amortization 59,138 58,170 46,205 Income tax expense 34,014 30,823 31,300 Interest expense, net 4,051 3,376 1,729 EBITDA $ 188,193 $ 175,750 $ 164,240 Working Capital Working capital is a non-GAAP measure.
For the year ended December 31, 2022, our T&D revenues were $1.75 billion, or 58.0%, of our revenue, compared to $1.30 billion, or 52.1%, of our revenue for the year ended December 31, 2021 and $1.15 billion, or 51.4%, of our revenue for the year ended December 31, 2020.
For the year ended December 31, 2023, our T&D revenues were $2.09 billion, or 57.3%, of our revenue, compared to $1.75 billion, or 58.0%, of our revenue for the year ended December 31, 2022 and $1.30 billion, or 52.1%, of our revenue for the year ended December 31, 2021.
We believe that our financial position, positive cash flows and other operational strengths will enable us to manage our markets and give us the flexibility to successfully execute our strategies.
We believe that our financial position, positive cash flows and other operational strengths will enable us to respond to challenges and uncertainties in the markets we serve and give us the flexibility to successfully execute our strategy.
We have an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $200 million upon receipt of additional commitments from new or existing lenders.
The Facility also allows for $15 million to be used for swingline loans. The Company has an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $200 million upon receipt of additional commitments from new or existing lenders.
The Master Loan Agreements may be used for financing of equipment between us and the lenders pursuant to one or more equipment notes (“Equipment Notes”). Each Equipment Note constitutes a separate, distinct and independent financing of equipment and contractual obligation. As of December 31, 2022, we had two outstanding Equipment Notes collateralized by equipment and vehicles owned by us.
The Master Loan Agreements may be used for financing of equipment between us and the lenders pursuant to one or more equipment notes (“Equipment Notes”). Each Equipment Note constitutes a separate, distinct and independent financing of equipment and contractual obligation.
SG&A, was $222.4 million for the year ended December 31, 2022, an increase of $15.2 million from $207.2 million for the year ended December 31, 2021.
SG&A was $234.6 million for the year ended December 31, 2023, an increase of $12.2 million from $222.4 million for the year ended December 31, 2022.
Additionally, subject to certain exceptions, our domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement.
Additionally, subject to certain exceptions, the Company’s domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement. The Credit Agreement provides for customary events of default.
Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00% to 1.75% for non-performance letters of credit or 0.50% to 0.875% for performance letters of credit, based on our consolidated Leverage Ratio.
Letters of credit issued under the Facility are subject to a letter of credit fee of 1.25% to 2.00% for non-performance letters of credit or 0.625% to 1.00% for performance letters of credit, based on the Company’s Net Leverage Ratio.
The following table provides the Company’s calculation of working capital: As of December 31, (in thousands) 2022 2021 2020 Total current assets $ 890,291 $ 748,390 $ 636,684 Less: total current liabilities (666,960) (498,599) (443,400) Working capital $ 223,331 $ 249,791 $ 193,284 36 TABLE OF CONTENTS Liquidity, Capital Resources and Material Cash Requirements As of December 31, 2022 and 2021, we had working capital of $223.3 million and $249.8 million, respectively.
The following table provides the Company’s calculation of working capital: As of December 31, (in thousands) 2023 2022 2021 Total current assets $ 1,026,244 $ 890,291 $ 748,390 Less: total current liabilities (747,202) (666,960) (498,599) Working capital $ 279,042 $ 223,331 $ 249,791 37 TABLE OF CONTENTS Liquidity, Capital Resources and Material Cash Requirements As of December 31, 2023 and 2022, we had working capital of $279.0 million and $223.3 million, respectively.
We believe we have adequate sources of liquidity to meet our long-term liquidity needs and foreseeable material cash requirements, including those associated with funding future acquisition opportunities.
Our primary short-term liquidity needs include cash for operations, debt service requirements, capital expenditures, and acquisition and joint venture opportunities. We believe we have adequate sources of liquidity to meet our long-term liquidity needs and foreseeable material cash requirements, including those associated with funding future acquisition opportunities.
Purchase Commitments for Construction Equipment As of December 31, 2022, we had approximately $14.1 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur over the first four months of 2023.
Purchase Commitments for Construction Equipment As of December 31, 2023, we had approximately $32.5 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur in 2024.
We had no debt outstanding under the Facility as of December 31, 2021. Letters of Credit Some of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our insurance programs.
Letters of Credit Some of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our insurance programs.
Segment Results The following table sets forth, for the periods indicated, statements of operations data by segment, segment net sales as a percentage of total net sales and segment operating income as a percentage of segment net sales: For the Year Ended December 31, 2022 2021 (dollars in thousands) Amount Percent Amount Percent Contract revenues: Transmission & Distribution $ 1,745,792 58.0 % $ 1,301,587 52.1 % Commercial & Industrial 1,262,750 42.0 1,196,702 47.9 Total $ 3,008,542 100.0 $ 2,498,289 100.0 Operating income (loss): Transmission & Distribution $ 138,886 8.0 $ 132,738 10.2 Commercial & Industrial 43,159 3.4 54,418 4.5 Total 182,045 6.0 187,156 7.5 Corporate (67,138) (2.2) (68,596) (2.7) Consolidated $ 114,907 3.8 % $ 118,560 4.8 % Transmission & Distribution Revenues for our T&D segment for the year ended December 31, 2022 were $1.75 billion compared to $1.30 billion for the year ended December 31, 2021, an increase of $444.2 million, or 34.1%.
Segment Results The following table sets forth, for the periods indicated, statements of operations data by segment, segment net sales as a percentage of total net sales and segment operating income as a percentage of segment net sales: For the Year Ended December 31, 2023 2022 (dollars in thousands) Amount Percent Amount Percent Contract revenues: Transmission & Distribution $ 2,089,196 57.3 % $ 1,745,792 58.0 % Commercial & Industrial 1,554,709 42.7 1,262,750 42.0 Total $ 3,643,905 100.0 $ 3,008,542 100.0 Operating income (loss): Transmission & Distribution $ 149,703 7.2 $ 138,886 8.0 Commercial & Industrial 45,889 3.0 43,159 3.4 Total 195,592 5.3 182,045 6.0 Corporate (66,499) (1.8) (67,138) (2.2) Consolidated $ 129,093 3.5 % $ 114,907 3.8 % Transmission & Distribution Revenues for our T&D segment for the year ended December 31, 2023 were $2.09 billion compared to $1.75 billion for the year ended December 31, 2022, an increase of $343.4 million, or 19.7%.
The $49.3 million of cash used in investing activities in the year ended December 31, 2021 consisted of $52.4 million for capital expenditures, partially offset by $3.1 million of proceeds from the sale of equipment. During the years ended December 31, 2022 and 2021, we used cash of $9.3 million, and $28.1 million, respectively in financing activities.
During the years ended December 31, 2023 and 2022, we used net cash of $79.1 million and $185.7 million, respectively, in investing activities. The $79.1 million of cash used in investing activities in the year ended December 31, 2023 consisted of $84.7 million for capital expenditures, partially offset by $5.6 million of proceeds from the sale of equipment.
We believe our $349.3 million borrowing availability under our revolving line of credit at December 31, 2022, future cash flow from operations and our ability to utilize short-term and long-term leases will provide sufficient liquidity for our short-tern and long-term needs. Our primary short-term liquidity needs include cash for operations, debt service requirements, capital expenditures, acquisition and joint venture opportunities.
We believe our $442.4 million borrowing availability under our revolving line of credit at December 31, 2023, future cash flow from operations and our ability to utilize short-term and long-term leases will provide sufficient liquidity for our short-term and long-term needs.
Operating income, as a percentage of revenues, for our T&D segment decreased to 8.0% for the year ended December 31, 2022 from 10.2% for the year ended December 31, 2021.
Operating income, as a percentage of revenues, for our C&I segment decreased to 3.0% for the year ended December 31, 2023 from 3.4% for the year ended December 31, 2022.
The $30.3 million year-over-year increase in cash provided by operating activities was primarily due to favorable net changes in operating assets and liabilities of $15.1 million, partially offset by a $1.6 million decrease in net income.
The $96.5 million year-over-year decline in cash provided by operating activities was primarily due to unfavorable net changes in operating assets and liabilities of $93.9 million, offset by a $7.6 million increase in net income.
As of December 31, 2022, we had $75.0 million of remaining availability to purchase shares under our current program, which continues in effect until May 8, 2023, or until the authorized funds are exhausted. We continue to manage our increasing operating costs, including increasing insurance, equipment, labor and material costs.
As of December 31, 2023, we had $72.5 million of remaining availability to purchase shares under our current program, which continues in effect until May 8, 2024, or until the authorized funds are exhausted.
Our C&I bidding opportunities could be impacted by market disruptions, and as a result, the growth of our C&I market will be heavily dependent on the timing and pace of the overall market recovery.
We believe electric utility employee retirements could increase with further economic recovery, which may result in an increase in outsourcing opportunities. Our C&I bidding opportunities could be impacted by market disruptions, and as a result, the growth of our C&I market will be heavily dependent on the timing and pace of the overall market recovery.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAny borrowings under our Facility are based upon interest rates that will vary depending upon the prime rate, Canadian prime rate, federal funds effective rate, the NYFRB overnight bank funding rate, CDOR, and LIBOR (or any interest rate replacing LIBOR).
Biggest changeAny borrowings under our Facility are based upon interest rates that will vary depending upon the prime rate, Canadian prime rate, the NYFRB overnight bank funding rate, CDOR, and Term SOFR Reference Rate.
If market rates of interest on all our revolving debt as of December 31, 2022, which is subject to variable rates, permanently increased by 1%, the increase in interest expense on all revolving debt would decrease future income before provision for income taxes and cash flows by approximately $0.1 million annually.
If market rates of interest on all our revolving debt as of December 31, 2023, which is subject to variable rates, permanently increased by 1%, the increase in interest expense on all revolving debt would decrease future income before provision for income taxes and cash flows by approximately $0.1 million annually.
If market rates of interest on all our revolving debt, which is subject to variable rates as of December 31, 2022, permanently decreased by 1%, the decrease in interest expense on all debt would increase future income before provision for income taxes and cash flows by approximately $0.1 million annually.
If market rates of interest on all our revolving debt, which is subject to variable rates as of December 31, 2023, permanently decreased by 1%, the decrease in interest expense on all debt would increase future income before provision for income taxes and cash flows by approximately $0.1 million annually.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We were not parties to any derivative instruments and had no derivative financial instruments during the years ended December 31, 2022, 2021 or 2020.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We were not parties to any derivative instruments and had no derivative financial instruments during the years ended December 31, 2023, 2022 or 2021.
Borrowings under our Equipment Notes are at fixed rates established on the date the note was executed. 43 TABLE OF CONTENTS
Borrowings under our Equipment Notes are at fixed rates established on the date the note was executed. 44 TABLE OF CONTENTS
We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings. As of December 31, 2022, we had $12.9 million of borrowings under our Facility.
We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings. As of December 31, 2023, we had $13.2 million of borrowings under our Facility.
If the prime rate, Canadian prime rate, federal funds effective rate, the NYFRB overnight bank funding rate, CDOR, or LIBOR (or any interest rate replacing LIBOR) rises, any interest payment obligations would increase and have a negative effect on our cash flow and financial condition.
If the prime rate, Canadian prime rate, the NYFRB overnight bank funding rate, CDOR, or Term SOFR Reference Rate rises, any interest payment obligations would increase and have a negative effect on our cash flow and financial condition.

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